Two-Stage International Arbitration


Two-Stage Process: Negotiation, Arbitration

a. Negotiation Between Executives The parties shall attempt to resolve any dispute arising out of or relating to this [Agreement] [Contract] promptly by negotiation between executives who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for administration of this contract. To initiate a negotiation, a party shall give the other party written notice of any dispute not resolved in the normal course of business. Within [30] days after delivery of the notice, the executives of both parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the dispute. All negotiations pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence.

¹ Arbitral panels generally consist of one or three arbitrators. Often, parties to a large or complex dispute provide for a panel of three arbitrators because they believe that three arbitrators will have a broader experience base and be less likely to render an irrational award. (Note that CPR Arbitration Rules address this issue by requiring reasoned awards made in accordance with governing law.) Choosing three arbitrators rather than one increases cost. Consider providing for a sole arbitrator if a dispute is below a certain monetary amount, and for three arbitrators if above that amount. ² The seat of arbitration controls procedural aspects of arbitration. The consequences of selecting the seat can be profound. If the parties do not designate the seat of arbitration in their agreement, under CPR Rules the arbitrators will decide. b. Arbitration Any dispute arising out of or relating to this [Agreement] [Contract], including the breach, termination or validity thereof, which has not been resolved by negotiation as provided herein within [45] days after the executives of both parties first meet (unless the parties mutually agree in writing to extend the time), shall be finally resolved by arbitration in accordance with the International Institute for Conflict Prevention and Resolution (“CPR”) Rules for Administered Arbitration of International Disputes [currently in effect OR in effect on the date of this Agreement], by [a sole arbitrator] [three independent and impartial arbitrators1] to be appointed by CPR; [provided, however, that if one party fails to participate in the negotiation as agreed herein, the other party can commence arbitration prior to the expiration of the time periods set forth above.] Judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof. The seat of the arbitration shall be (city, country). The language of the arbitration shall be2 ___________.